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mew5280
New Member

IRA Tax Deduction when not eligible for a 401k plan partial year

In 2017, I worked from January - March on one W2 contract position where I was eligible and participated in a company 401k.  From April - June I was not employed and from July - December (and current), I have been working on another W2 contract position where I was NOT eligible for a 401k plan.  When I enter an IRA deduction for 2017, I get a message that my AGI is too high for someone who is eligible for a 401k retirement plan and I received NO deduction.  But I was not eligible for any retirement plan from March - December of 2017 so I think I can be allowed that deduction, correct? 

 

I cannot find anywhere in Turbotax (I'm using the online version) to indicate that I did not have 401k eligibility for 9 months last year.  I have entered two W4's, one has 401k info (Jan-March) and the second does not.  Is Turbotax making an assumption on the first W4?  Is there any way to change this?  Otherwise I will have to file using another service or manually.

 

Thanks

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1 Reply
mew5280
New Member

IRA Tax Deduction when not eligible for a 401k plan partial year

Answering my own question...  On my third hour of internet research, I finally found the answer.   If you are covered by an employer 401k for even 1 hour of a year, for tax purposes, you are considered covered for the entire year.  If you contribute to an IRA, you do not get a deduction on this until you retire.  Seems like a really silly way to do this but that's the answer.  

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